Unsurprisingly the biggest factor adversely affecting the UK’s economy is still the exorbitant charges that are being made by the banks on commercial loans. As a result of these excessive charges small businesses are finding it increasingly more difficult to obtain much needed credit.
It is often heard that small businesses are the “backbone of the British economy,” and consequently the crucial element in promoting economic recovery. This is undoubtedly going to be hindered by the likes of the UK’s greedy banks that have not only raised overdraft charges but are now refusing loans or recalling existing ones. Let’s suffice it to say – if the UK is ever likely to recover from the recession it won’t be thanks to the banks.
The head of the Federation of Small Business (FSB), Stephen Alambritis, stated that if small businesses are in a position to obtain funding from the bank, they now come with additional fees and charges. He has called for the government to keep a closer eye on the banks as 89% of small businesses tend to do business with the big four high-street banks.
I believe that what the UK’s banks fail to realise is what small businesses offer the UK. Let’s take a look of some of the benefits small businesses bring to the country:
- Small businesses account for over 50% of all turn-over by UK companies.
- Small and medium sized businesses account for 60% of private sector jobs – without these small businesses even more people would be out of work. What the banks should be considering – is that by aiding small business growth in the UK this will not only have a knock-on effect to boost the economy but will open up more jobs to those people currently out of work.
- The majority of young people under the age of 25 in work as a result of apprenticeships can be attributed to small business. I believe this is 7 out of 10 young people are apprenticed to small businesses.
- Research shows that small businesses grow a significantly faster rate than their larger counterparts, thus creating opportunities for more jobs in the future.
We are fortunate that the UK’s government have recognised the financial problems faced by small businesses in the current economic climate and continue to urge the banks to increase lending to viable business schemes. We are also fortunate that there are governmental schemes that have been set-up to alleviate the pressure on small business such as tax deferrals and the enterprise finance guarantee scheme aimed at providing government backed loans to small businesses.
So let’s hope that the banks of the UK start to recognise the importance of small businesses before it’s too late.